At the same time, many continue to misunderstand or underestimate both the financial and demographic realities of retirement, and they also make retirement planning a relatively low priority, according to findings of BlackRock’s latest Investor Watch survey.
More than four in 10 (42%) of non-retired investors say they have lowered their expectations for the kind of lifestyle they will have in retirement. Half of investors say either they have pushed back their retirement date (15%) or are unsure when they will retire (35%).
Fifty-one percent of non-retired investors agree (and only 10% strongly agree) they know how much to save to cover the lifespan of their full retirement. More than one-third (37%) say they are not confident they will achieve the annual income needed for the time they expect to be in retirement.
About one in three expect to spend less than 15 years in retirement—despite the fact that a healthy 65-year-old couple in the U.S. today has a 50% chance of at least one of them living to 92.
When given a list of common pursuits, planning for retirement ranked third among things that investors spent the most time on last year (20%), after planning vacations (30%) and exercising at the gym (29%).
Little Understanding of Investing
The majority of non-retired investors rate stocks as the most important retirement investment vehicle (81%) followed by bonds (60%), cash (57%) and annuities (48%). However, four in 10 non-retired investors agree they plan to be very “risk averse” in their retirement investing; four in 10 also agree that they do not think there is “a safe way to invest for retirement.”
The survey shows many investors still have a ways to go in understanding the full scope of available income generators. Nearly two-thirds (63%) of investors say they are familiar with income-generating investments. However, majorities of investors, both non-retired and retired, did not correctly identify several investments as income generating, including municipal bonds (34% identified these as “income generating”), government bonds (29%), money market funds (25%) and corporate bonds (25%).
Investors were most often able to identify dividend-paying stocks as “income generating” (61%). About one-quarter of investors (24%) say that during the next six months, they will increase their portfolio allocation to dividend-producing equities, the investment category most likely to attract new money.
Though their knowledge has gaps, investors generally appreciate that income generation offers benefits at every life stage: 56% disagree that these investments are only for retirees, and 60% say that they “make me feel safer in the current investing environment.”
For the BlackRock Investor Watch research, 671 investors—294 retired and 377 non-retired—were polled between September 26 and October 9. All investors surveyed work with financial advisers and had $250,000 or more in investable assets.